Defense Minister Moshe Dayan has threatened to resign from the Cabinet unless the government assumes a firmer attitude toward Egyptian violations of the Aug. 7 cease-fire agreements, it was learned today. Gen. Dayan met twice with Premier Golda Meir over the weekend to discuss the issue but the rift between them has reportedly deepened. The matter was taken up at today’s Cabinet meeting. Also discussed today were the talks being conducted in New York by United Nations special envoy Dr. Gunnar V. Jarring separately with Arab and Israeli representatives. The Cabinet decided to extend UN Ambassador Yosef Tekoah’s stay in Jerusalem at least through next Tuesday when it will meet again to conclude discussion on the Jarring talks. Ambassador Tekoah is Foreign Minister Abba Eban’s alternate in the talks. Some sources said the postponement of his return to New York was related to the serious differences of opinion within the Cabinet. Gen. Dayan and Chief of Staff Gen. Haim Bar Lev reviewed security matters at today’s session. It was disclosed that at last Sunday’s Cabinet meeting, Gen. Dayan proposed that Israel formally cancel the cease-fire on grounds that Egypt violated it by moving SAM-2 anti-aircraft missiles into the standstill cease-fire zone after the truce went into effect. The Egyptians have improved their military position and continue to do so. Gen. Dayan claimed.

Gen. Dayan’s proposal was defeated by a majority of the Cabinet when a vote was taken. But he had the support of two influential members, Minister-Without-Portfolio Shimon Peres and Minister of Police Shlomo Hillel. Political circles said today that a serious crisis was brewing within Mrs. Meir’s Labor Party. At a Labor Party meeting last night. Foreign Minister Abba Eban strongly defended the government’s acceptance of the cease-fire and the talks since entered into under the auspices of Dr. Jarring. Had Israel rejected the plan, he said, “Our situation today would be much more difficult; we would be at war with Egypt, with a growing danger of confrontation with the Soviet Union involving growing casualties and a shrinkage of our vital air power,” Mr. Eban said. Furthermore, he added, “Israel would have appeared in the eyes of the world to be indifferent to the opportunity to halt bloodshed” and would have jeopardized its American support. The Foreign Minister told his Labor Party colleagues that in the interests of national unity he had indulged in an “acrobatic effort to formulate our policy in such a man- ner that it implied both a refusal to withdraw a single inch and a readiness to make territorial concessions in exchange for real peace.” Mr. Eban said that he would have preferred clarity. He said Israel had to be flexible “as long as international circumstances allowed this. When the moment of truth came, we did not flinch,” Mr. Eban declared.

GALILL WARNS ISRAEL MAY BE FORCED TO QUIT PEACE TALKS IF IT CENTERS ON WITHDRAWAL

Minister-Without-Portfolio Israel Galill, a close associate of Premier Meir in the Labor Party. warned in a radio interview Friday that a situation might arise in the current Arab-Israeli peace talks in New York which would Justify Israel’s withdrawal from the discussions. Mr. Galill said that Egyptian violations of the cease-fire could lead to the total breakdown of the American peace initiative. He said Israel might feel impelled to walk out if the main aim of the talks appeared to center on Israeli withdrawal from the occupied territories rather than on a binding Middle East peace. “We might be drawn toward discussions on territorial issues or plans for withdrawal before being assured that the other side intends to make peace–this meaning an end to the 1948 conflict, an end to war and the beginning of mutual relations,” Mr. Galili said. (Police Minister Hillel was quoted by the Paris newspaper Nouvelle Observateur yesterday as saying that “To obtain peace, we are ready to return the majority of the occupied territories.”)

Israel’s Ambassador to the U.S., Gen. Yitzhak Rabin, said Friday in Tel Aviv that Israel would be militarily stronger than before when the 90-day cease-fire is up in November. “I know that what I say is soundly based,” the former Israeli Chief of Staff added as he prepared to return to Washington after a ten-day home leave. Commenting on American proposals for a U.S.-Soviet Joint force to police an eventual Arab-Israeli peace agreement. Gen. Rabin said he was prepared to see U.S. forces in the region “provided we do not have to pay dearly for it in the political sphere.” He said an American presence would “check any sudden Russian onslaught with massive units as an escalation of their present involvement in Egypt.” Ambassador Rabin said Sen. J. William Fulbright’s proposal for an imposed settlement that would push Israel back to its pre-June, 1967 borders was “catastrophic” from Israel’s point of view. He said he was not taking any Israeli territorial proposals back to Washington with him. “The only map I have is the cease-fire map. As long as there is no clear evidence that the Arabs really want peace–genuine peace–there is no need for any other map,” he said.

Former Minister Menachem Beigin continued to denounce the cease-fire and the current indirect talks at United Nations headquarters in New York. Mr. Beigin, who led the Gahal faction’s defection from the Cabinet when the government agreed to the U.S. peace initiative, claimed in Tel Aviv yesterday that the separate meetings of Ambassador Jarring with Israeli and Arab representatives in New York this past week “can certainly not be described as negotiations for a peace treaty between countries that had waged a war.” In Mr. Beigin’s opinion. Dr. Jarring was simply resuming his rounds of separate meetings with Israeli and Arab representatives which he abandoned as fruitless more than a year ago.